Nationwide chief says bank branches are not dead yet as he oversees record profits

Reports of the death of the bank branch have been greatly exaggerated, the boss of the Nationwide declared yesterday.

Graham Beale said Britain’s biggest building society will invest £500m in improving its 700 branches over the next five years, bucking the trend among the other banks to shut outlets.

Nationwide announced the branch programme along with a 54 per cent rise in profits to a record of just over £1bn, meaning that Beale, who said he will retire in the summer of 2016, is leaving on a high note as well as on a high pension.

Planning for the future: Nationwide boss Graham Beale said Britain’s biggest building society will invest £500m in improving its 700 branches over the next five years

Beale is one of the best paid building society chiefs, receiving £2.57m last year. The 56-year-old has a pension pot worth more than £6m that will give him a pension of more than £280,000 a year for life.

Falling rates for savers meant that Nationwide made £458m more in interest received on mortgages than it paid out to depositors.

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But Beale denied Nationwide was boosting its own profits at the expense of savers, who have endured slender returns for several years.

‘It is very difficult to delight savers when the bank rate is half of one per cent,’ he said.

‘We need to operate at the right level of profit and the right level of capital to make sure we are strong and robust. But once we have got to our optimum profit – and the £1bn level is about right – our motivation will be to give back to our members by investing in service and in better rates.’

Rival banks are expected to shut more than 500 branches this year, forcing some customers to travel for miles. Nationwide, by contrast, is ploughing money into modernising its 700-strong network and opening a handful of new branches.

It is expanding a high-definition video link called Nationwide Now that connects customers to a financial expert, creating 200 jobs.

Lending: Nationwide lent £27.1bn over the year, giving it a 13.4 per cent share of the market

It is also offering coffee and wi-fi access in branches, along with seminars on retirement, first-time home-buying and inheritance tax.

‘If people want to talk to a person, they can.

‘We will never insist on customers using a machine if they don’t feel comfortable,’ said Beale.

He will retire after nine years at the helm, during which time he steered through the financial crisis, rescuing the Cheshire, Derbyshire and Dunfermline building societies. During his reign assets grew more than 40 per cent to £195.6bn.

Nationwide lent £27.1bn over the year, giving it a 13.4 per cent share of the market. It hauled in £1.9bn more in savings accounts, despite record low interest rates and the fact that National Savings Pensioner bonds, paying either 2.8 per cent over one year and 4 per cent over three years, drew in £12bn in the three months to March – equivalent to the entire growth in the market.

It has also lured current account customers from the Big Four.

Write-offs for bad debts dropped by 34 per cent to £251m, mainly due to an improvement in the commercial property portfolio. Beale said the UK economy is ‘pretty strong’ and that he expects the recovery to continue with base rates beginning to rise gradually in the second half of next year. He reckons the housing market will remain ‘resilient’.

He warned that a British exit from the EU ‘would be sad if it leads to major financial institutions leaving the country’.

‘Nationwide operates only in the UK so it doesn’t affect us,’ he said.

‘But London is one of the world’s major financial centres, and despite all the bad things banks have done they generate an awful lot of wealth for the UK.’

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Nationwide chief says bank branches are not dead yet as he oversees record profits